Qantas cuts 1000 jobs, mulls future of Jetstar and frequent flyers

Qantas will axe at least 1000 jobs over the next year and warned that it will slump to a loss of up to $300 million in the first half, blaming a market deterioration in trading conditions and weaker return on fares.

In a dramatic response to its rapidly deteriorating financial position, the airline will consider the possibility of partial sales of businesses including Jetstar Australia and its frequent flyer loyalty program.

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It said "all options are on the table" as part of a wide-ranging structural review. The airline would not name the most likely options but possible courses of action include sell-downs of its investments in Asia. They include Jetstar Asia in Singapore and Jetstar Japan.

Credit ratings agency Moody's delivered a further blow to the beleaguered airline on Thursday night when it warned that it is considering downgrading its all-important investment grade credit rating to junk status.

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Analysts also scrambled to slash their forecasts of full year earnings, with Merrill Lynch tipping a loss of up to $868 million.

Qantas shares slumped 16 per cent to $1.02 - just shy of an all-time low of 96 cents reached last year following the earnings warning. Its shares closed at $1.07, down 11 per cent.

''The challenges we now face are immense – but we will overcome them and we will continue to build a stronger and better Qantas for Australia,'' he said in a statement.

Renewing his attack on his arch rival, Mr Joyce also said there had been ''unprecedented distortion of the Australian domestic market with Virgin Australia's strategy to seek major ownership and massive financial backing from government-owned airlines''.

''We cannot and we will not stand still in these extraordinary circumstances.''

Qantas has been aggressively lobbying the government to provide financial assistance which could include a debt guarantee or the purchase of a small stake.

Mr Joyce said the structural review was running separately to its ongoing talks with the government. He informed the Treasurer Joe Hockey and Transport Minister Warren Truss of the structural review and profit warning shortly after it informed the market this morning.

He also defended his own position when asked about the significant fall in Qantas's share price since he began as chief executive five years ago.

"The board have been very supportive on this. The board understands the dynamics in the marketplace," Mr Joyce said.